WASHINGTON—The Federal Communications Commission plans to propose new open Internet rules on Thursday that would allow content companies to pay Internet service providers for special access to consumers, according to a person familiar with the proposal.

The proposed rules would prevent the service providers from blocking or discriminating against specific websites, but would allow broadband providers to give some traffic preferential treatment, so long as such arrangements are available on "commercially reasonable" terms for all interested content companies. Whether the terms are commercially reasonable would be decided by the FCC on a case-by-case basis.

Companies such as Skype or Netflix that offer phone or video services that rely on broadband connections could take advantage of such arrangements by paying the broadband providers to ensure that their traffic reaches consumers without disruption. Those companies would be paying for preferential treatment on the "last mile" of broadband networks that connects directly to consumers' homes. The proposal does not address the separate issue of back-end interconnection or peering between content providers and broadband networks.

FCC Chairman Tom Wheeler indicated he planned to issue new open Internet rules in February after a federal court threw out the FCC's previous rules. The court's ruling sketched out a legal pathway through which the FCC could try and achieve the same goals, and Mr. Wheeler has said he plans on following that road map.

The court said in January that the FCC has authority to regulate broadband-company practices under a section of the 1996 telecommunications law that gives it broad authority to encourage U.S. broadband service. The court also indicated that the FCC could impose a "no blocking" rule if it found a different legal justification.

The FCC's proposal would allow some forms of discrimination while preventing companies from slowing down or blocking specific websites, which likely won't satisfy all proponents of net neutrality, the concept that all Internet traffic should be treated equally. The Commission has also decided for now against reclassifying broadband as a public utility, which would subject ISPs to much greater regulation. However, the Commission has left the reclassification option on the table at present.

In addition, the FCC plans to significantly increase the disclosure requirements for broadband providers, which could include details such as the speed and congestion of their service along the last mile. The proposal wouldn't cover wireless carriers, but it will ask whether mobile broadband providers should be subject to a similar commercially reasonable standard when striking deals with content providers.

FCC proposal would destroy net neutrality

The Federal Communication Commission's proposal for new net neutrality rules will allow Internet service providers to charge companies for preferential treatment, effectively undermining the concept of net neutrality, according to The Wall Street Journal. The rules will reportedly allow providers to charge for preferential treatment so long as they offer that treatment to all interested parties on "commercially reasonable" terms, with the FCC will deciding whether the terms are reasonable on a case-by-case basis. Providers will not be able to block individual websites, however.

The goal of net neutrality rules is to prevent service providers from discriminating between different content, allowing all types of data and all companies' data to be treated equally. While it appears that outright blocking of individual services won't be allowed, the Journal reports that some forms of discrimination will be allowed, though that will apparently not include slowing down websites.

The commission will begin to internally circulate the rules tomorrow ahead of a vote on May 15th, after which the rules are expected to be opened up for public comment. The commission already detailed the framework of these new regulations back in February, with the new rules aimed at replacing the neutrality-enforcing Open Internet regulations that were struck down in court earlier this year.

Though Internet service providers likely aren't eager for regulation to return, neutrality advocates such as Netflix have been calling on the FCC to take action quickly, and with even broader action than before. Without neutrality rules, service providers can limit access to other companies' services if they choose to — a major problem for a big provider of data like Netflix. Netflix would also like to see the rules govern the actual infrastructure for moving data, preventing service providers from charging companies fees for delivering it to their customers, but the FCC has said that it won't be doing this for now.

Instead, the new regulations are expected to broadly resembled the earlier Open Internet rules, with one key difference that this time they'll rely on legal grounds that are believed to grant the FCC the proper authority to enforce them — though it'll still be working off of something closer to a technicality than explicit permission. The FCC has already been accepting public comments based on the framework released in February, which it should be factoring into the draft up for vote next month.

WASHINGTON (Reuters) - U.S. regulators are expected to vote on May 15 on a new set of so-called "net neutrality" rules aimed at making certain that broadband providers do not slow down or block consumers' access to legal Internet content.

Federal Communications Commission Chairman Tom Wheeler on Wednesday said he plans to circulate his proposed rules among other commissioners on Thursday, teeing them up for a vote at the FCC's May 15 meeting. The draft rules will then be up for public comment.

The rules are expected to ensure that network operators disclose exactly how they manage Internet traffic and do not restrict consumers as they surf the Web.

Wheeler has in the past indicated that the new net neutrality rules were not expected to address the issue of interconnection, or agreements in which content companies pay network providers for faster access to their sites or services.

That issue was recently brought into the spotlight by a tussle between video streaming service Netflix Inc and cable company Comcast Corp

Virtually all large Internet service providers, such as Verizon Communications Inc and Time Warner Cable Inc, have pledged to abide by the principles of open Internet reinforced by these rules.

But critics have raised concerns that, without a formal rule, the voluntary pledges could be pulled back over time and also leave the door open for deals that would give unequal treatment to websites or services.

The U.S. Court of Appeals for the District of Columbia Circuit in January for the second time struck down the FCC's previous version of the open Internet order.

Comcast, through conditions placed on its 2011 merger with NBC Universal, is the only Internet provider still bound by the earlier FCC net neutrality rules through 2018.

Comcast has now proposed to buy its biggest rival Time Warner Cable Inc and Netflix has come out in opposition of the $45.2 billion merger, arguing that the Internet provider should be banned from charging fees for delivering its content.

Comcast has said that Netflix's opposition was "based on inaccurate claims and arguments."

Netflix, which accounts for much of Internet traffic during peak hours, in February struck a deal to pay Comcast for faster online delivery of its movies and TV shows.

Some companies pay Internet service providers or other firms that serve as intermediaries to better deliver traffic to users.

U.S. FCC has not considered interconnection agreements as part of its net neutrality review, which focuses only on the last leg of the network that reaches the consumer and not the connections the traffic goes through before then.

Wheeler Goes Over to the Dark Side

April 24th, 2014 by Rob Powell

Remember the new network neutrality framework FCC Chairman Tom Wheeler promised to come up with? Well, according to the Wall Street Journal, those rules will make their grand entrance in three weeks, but of course they’ve ‘leaked’. If accurate, I’m not sure calling them ‘net neutrality’ rules fits anymore.

The FCC will apparently endorse preferential treatment by ISPs for content providers who pay up. Yep, fast lanes with toll booths here we come. I have a feeling the net neutrality side of the fence is going to be a tad peeved tomorrow, while service providers express cautious optimism publicly and celebrate privately.

There’s still the caveats that ISPs can’t actually block anything while preferential treatment would have to be available on “commercially reasonable” terms whose appropriateness would be decided on a case by case basis. But defining such terms is what lobbyists are for, right? I hope the actual order is a bit more specific, as these bars appear to be not just low but covered with nerf foam.

Now the question the industry and its regulators have to answer is this: How do you get the big content providers to pay for preferential treatment without stifling the small content providers of tomorrow who can’t pay for it yet? In other words, under this paradigm why would anyone even try to create the next Netflix or Facebook? Long before they have the scale to do it, their model can be copied by a big content player that already has the scale to pay up and do it better. The real risk is not to the likes of Google or Apple or even Netflix here. The big guys can take care of themselves, and actually these rules could help them insulate themselves from future competition. It’s the little guys with a website or an app and a dream that have no voice in all this.

Helmets & goggles on, this could get messy. I don’t think anyone quite comprehends just how complicated this will get or how fast.

FCC Says It Wants to Re-Instate Open Internet Rules, Not Reverse Them

One thing that was very clear from some of reporting around this topic, however, was that Net Neutrality advocates have a lot of sympathy with a lot of media outlets.

The debate isn’t likely to get any less rancorous moving forward – particularly when the topic of paid prioritization comes into play. And people who want to prevent that are not going to give up easily no matter what courts and regulators say.

The Net Neutrality debate is heating up once again. What was reported by numerous news media yesterday as a move by the FCC away from the Open Internet is actually quite the opposite, said senior FCC officials on a conference call with reporters this morning. FCC Chairman Tom Wheeler has circulated a draft of a notice of proposed rule making (NPRM) within the FCC that aims to re-instate Open Internet rules that were struck down by an appeals court earlier this year, the officials said.

The Open Internet rules that were struck down prevented blocking of legal traffic and “unreasonable” traffic discrimination. The second item is particularly contentious because in striking down that rule, the court left open the possibility that broadband providers might be able to charge more for higher-priority traffic — a possibility that Silicon Valley and some consumer groups are vehemently against.

When the court struck down those rules it said the FCC had not established its authority to impose those rules, but left open the possibility that the commission might be able to impose the rules if it could demonstrate that it had the authority under a specific section of the 1996 Telecom Act that gives the commission the authority to enact measures that would encourage the deployment of broadband infrastructure.

Latest Net Neutrality NPRM
The NPRM that Wheeler is circulating aims to re-impose the Open Internet rules using that authority so that courts will uphold the rules, officials said. FCC commissioners will vote on whether to adopt the NPRM on May 15, the officials said. If adopted a comment period would ensue before any further action would be taken.

According to the officials, the court decision that struck down the Open Internet rules advised the FCC to focus on what was “commercially reasonable” if it were to attempt to re-impose rules about the treatment of traffic. As a result the NPRM will propose fact-based rules to determine what is commercially reasonable. Examples of such rules might be whether conduct is anti-competitive or bad for consumers, or whether broadband providers acted in good faith.

The NPRM also asks for comment on whether certain practices are so clearly unreasonable that they should be prohibited, the officials said.

The previous Open Internet rules did not include an outright ban on traffic prioritization the FCC officials said. They also noted that there might be times when traffic prioritization might be appropriate, such as for a connection to a heart monitor and that the NPRM asks for input on when traffic prioritization might be appropriate.

The previous rules did prohibit the blocking of lawful content and that provision also is included in the rules proposed in the NPRM, officials said. The previous rules also did not touch on interconnection between service providers such as the ones between Comcast and Netflix that have been a source of controversy, nor do the rules proposed in the NPRM, they said.

According to the officials, people who believe they have been harmed by service providers in connection with Open Internet rules would be able to file informal or formal complaints. Additionally the FCC envisions monitoring blogs, newspapers and other sources for potential violations.

The NPRM does not propose classifying broadband Internet as a Title II telecommunications service – another option that the appeals court left open for the FCC. Reclassification would subject broadband to broad regulation and industry stakeholders are generally opposed to the idea. But the FCC officials noted today that the FCC still has a proceeding open about Title II reclassification and that the NPRM asks for input on when and where Title II might be used.

The upshot of all of this is that broadband providers may or may not be allowed to charge for paid prioritization, depending how the NPRM process shakes out.

Rancorous Open Internet Debate

One thing that was very clear from some of reporting around this topic, however, was that Net Neutrality advocates have a lot of sympathy with a lot of media outlets. Take this GigaOm head: When it comes to net neutrality, either the FCC thinks we’re idiots, or it just doesn’t care. Or the statement from Ars Technica that “New Net-Neutrality rules are anything but neutral.”

The debate isn’t likely to get any less rancorous moving forward – particularly when the topic of paid prioritization comes into play. And people who want to prevent that are not going to give up easily no matter what courts and regulators say.

US 'Net Neutrality' Goes Viral and Venal

By Peter Bernstein

OMG!

One would think that all of the commotion set off by the disclosure/leak on April 23 by the Wall Street Journal about U.S. Federal Communications Commission (FCC) head Tom Wheeler’s decision to put out a Notice of Proposed Rulemaking today (April 24) was a sign of the Apocalypse. Before Chairman Wheeler had a chance to present his proposal, comments from those in favor of what they thought would be included and those against went viral.

Depending on one’s perspective a revised Open Internet regime (aka “Net Neutrality) from the FCC— in the wake of the U.S. Supreme Court overturning the current regulatory structure in Verizon v. FCC—is the end of the world as we know it, or the dawn of better days ahead. Interestingly, it could be both.

Just as a quick explanation, the “venal” reference in the headline speaks to the rush to publish comments that characterized Wheeler’s proposal as “Payola.” There were even postings that spoke this as a “pay-to-play” regime and that Wheeler was returning to his roots as a Cable and Cellular industry lobbyist. Implied is that this falls into the category of the classic definition of venal as being capable of being bought or obtained for money or other valuable consideration and typically refers to acts of corruption, especially bribery. This is grossly unfair, but certainly made for eye-catching copy.

Net neutrality as regulators around the world have found in struggling with the issue is extremely complicated. It gets to a myriad of fundamental issues concerning free speech, commercial interests (whose ox may or may not get gored and who will prosper) and the universal availability to state-of-the-art digital communications in an increasingly connected world. And, that is just the proverbial tip of the iceberg.

As Dimov correctly concludes, Net Neutrality is a delicate balancing act. It is one where regulators have yet to find an equilibrium point, and here in the U.S. a combination of past FCC transgressions and now the court have only made things that much more complicated. As he explains the conundrum, “Any major involvement of the ISPs in the way their customers lawfully use the Internet leads to a wave of social protests and initiates political discussions. In turn, any proposal for a mandatory network neutrality raises fears about excessive government intervention in the market of Internet services and unintended consequences on the players of that market.”

This is very serious and very tough stuff, and regardless of what policies do or do not get adopted when the dust settles, the probability that this will end up back in the lap of the Supreme Court is high. It is also likely that this will become a political hot potato. The reason is that in an election year, the temptation to collect for so many deep-pocketed interests is simply irresistible.

Commercially unreasonable?

While I understand Wheeler’s looking to the Verizon v. FCC decision for guidance, and I was with him certainly on the need for transparency and the resolve to not allow blocking of legal content, there is something that does not sit well when it comes to the term “Commercially Unreasonable”. Hence, I am a bit conflicted as to how I feel about where we are.

I happen to be a bit old-school in the beliefs that cost-causers should be cost bearers. Thus, if Netflix and Google who are bandwidth hogs, the cost of which ultimately is reflected in our ISP rates, want to provide better quality experiences, I think ISPs should have the ability to make them pay for it.

Here in the U.S. in many major cities like Orlando, FL and Houston, TX, there are now toll roads that parallel existing “freeways” which during rush hour will save lots of time if you are willing to pay for the privilege. Communications networks may not be totally there yet, but creating the toll portion of the superhighway for those who want me to have a better experience, seems both logical and inevitable. It is not hard to imagine a day when users have a choice of Netflix classic and Netflix premium, for example. It is called choice.

I chose Netflix as an example because as a fan of the hugely popular “House of Cards” I will continue to subscribe despite the fact that Netflix just this week announced it is raising prices on its streaming service. In other words, whether there is Net Neutrality or not I am going to be paying more. The question that Net Neutrality is deciding is whether I just pay Netflix more directly or I pay more to my ISP because I can get Netflix. History says, I will actually pay them both more. What I can hope is that if ISPs can introduce tiered pricing to content providers, particularly road hogs looking to improve their deliverables, is that the revenues realized are used to upgrade the network for all of us and not just the big guys.

I also happen to be very old school and agree with the foundational tenets of competition as articulated in historic FCC attempts to assure equal access and open interconnection. If ISP XYZ decides to offer a competing service to an OTT or other content providers, that service should be under the same terms and conditions that apply to competitors. Indeed, the entry by ISPs into such markets with their own offerings are one way to assure prices charged for premium access and transport are commercially reasonable. And, while I feel for “innovators” without deep pockets who might not be able to afford to compete because of the cost of premium ISP services, that is a business decision that has to be factored into their plans and at least they would know what the costs of doing business were up front. This might be a damper on innovation, but to categorically say it will seems problematic at best.

Where the commercially unreasonable test as administered by the FCC on an ad hoc basis becomes a problem is that this hardly seems like an area the Commission needs to pursue. It only begs for the creation of a new annuity stream for the Federal Communications Bar Association. The FCC does not need to be in the business of managing markets.

At the risk of seeming neutral on Net Neutrality, my problem is the same as policy makers in that I see convincing arguments in support of those in favor and those against it. Like Dimov, there is no escaping that this is a complicated and delicate balancing act that needs to be dynamic rather than static, reflecting the realities of the accelerating pace of change that has engulfed every aspect of ICT around the world. One can only hope for a Solomon-like version of rough justice that leaves the Internet, which will be the only “public network of the future” sooner rather than later, open for business and for everyone.

The Wheeler proposal will be open for formal comments. If nothing else they should be appreciated for the entertainment value since hyperbole is always the order of the day in such comments because of the interests that at involved and the money at stake.

Back in January I wrote a column with my predictions on tech trends for 2014. I accurately predicted that Verizon’s position on Net Neutrality would be upheld with major consequences. It is only April and it has already been a big year for those consequences to manifest themselves. Fasten your seat belts because it is going to get a lot bumpier.